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| Can Financial Development Influence the Location Choice of FDI? |
| LV Chaofeng, HUANG Meibo
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School of Economics, Southwestern University of Finance and Economics;
Institute of International Development and Cooperation Academy, Shanghai University of International Business and Economics |
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Abstract This paper would discuss the impact of financial development on the location choice of FDI from incomplete contract perspective. We develop a monopolistic competition model based on Antràs and Helpman(2004), suggest a hypothesis, that is, financial development would promote FDI inflows of multinational manufactures, and contract intensity increase would enlarge the positive effect of financial development on FDI inflows. Using data across province and industry of China, we find evidence that supports this hypothesis, which is robust after controlling such variables as infrastructure, and other transmission channels of financial development.
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Received: 23 January 2016
Published: 01 November 2018
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